Do contracts need a review after a Court of Appeal case?

If you’re a building contractor, you’ll be interested to hear about a recent case in the Court of Appeal which has provided useful guidance on the extent of your liability for defective works.

Even if you’re not in the building trade, the case is equally applicable to manufacturers wanting to protect themselves against future claims for defective products.

In this case (Robinson –v– P E Jones (Contractors) Limited) a homeowner brought a claim against the contractor that had originally built the property, claiming the costs of remedying defective works carried out in 1992, but not discovered until 2004.

The homeowner could not pursue a claim under the original building contract because more than six years had passed since the works were completed. The homeowner therefore sought to pursue a claim under the common law of negligence.

This is where it gets a bit tricky, but stay with me and all will become clear. The homeowner brought the negligence case on the basis that claims in negligence can be brought after more than six years,  provided they are brought within 15 years of the work being carried out and within three years of the date the defects were, or ought to have been, discovered.

However, the building contractor had sought to exclude liability for negligence under the terms of the original building contract.

In finding for the building contractor, the Court of Appeal confirmed that unless the contractor expressly accepts a parallel liability in negligence, the liability will be limited to that assumed under the building contract, and the contractor will not be liable in negligence for defective works, other than where the negligence causes death or physical injury. The court also confirmed it is permissible for building contractors to expressly exclude liability in negligence within their terms and conditions.

This may sound complex, but the practical effect of this judgment is that, provided building contractors ensure their terms and conditions properly exclude liability in negligence, their potential exposure to claims for defective works will be limited to those arising under the building contract. Therefore they will only exist for a period of six years from the date the works were carried out.

It further highlights the need to ensure terms and conditions are properly drafted so that you do not inadvertently assume a parallel obligation in negligence, which could expose you to liability for defective works up to 15 years after they have concluded.

For more information on reviewing and redrafting your terms and conditions, whatever business you’re in, please call Colin Fenny at Harrison Drury Solicitors on 01772 258321.